New approach adds up to a better way to get results

About the Author

The road to hell, they say, is paved with good intentions.
Frequently, so is the road to government waste. Three years ago,
President Bush announced a $15 billion initiative to fight AIDS in
developing nations. Our government has spent freely since, but it's
unclear how many people we've helped. The program, says a recent
Associated Press report, "pushed so hard for fast results that
basic record keeping and accountability often went by the wayside,
making it hard to judge the true success."

John B. Taylor could have predicted this. In his new book,
Global Financial Warriors, the former Treasury
undersecretary for international affairs writes that, when it comes
to government aid programs, "What gets measured gets done." And he
found the opposite is true: When there's no system in place to
gauge results, there are seldom (if ever) any results to gauge.

During his four years at Treasury, Taylor got results -- in
areas he'd planned to and in areas he couldn't have imagined when
he was confirmed in 2001.

"I had come into government with lots of ideas and hell-bent for
reform," he writes. Reforming the International Monetary Fund "was
perhaps my highest priority." In his book, he explains how he
accomplished that -- and helped improve global bond markets by
doing so.

One problem plaguing international lenders is that it's
impossible for them to compel countries to repay money. During the
1990s, for example, Russia defaulted, sending shock waves through
the bond markets.

Taylor wisely recognized that because international bonds exist
beyond the reach of any government, there couldn't be a
governmental solution to this problem (even though that's what the
IMF wanted). Instead, he pressed lenders and borrowers alike to
agree to "collective action clauses," measures written into
contracts that would reduce the likelihood of default by giving
both parties ways to renegotiate debt if a country's economy
sours.

Thanks to Taylor's policies, the international economy is
turning away from IMF bailouts. Instead, developing nations are
focusing on long-term, pro-growth policies, such as maintaining a
strong currency. This is helping to reduce the threat of global
contagion -- the domino effect where one country's default causes
interest rates to rise for other countries. "Our strategy of moving
gradually and trying to signal intentions, which we hoped would let
markets adjust over time to control the global contagion, had
worked," he notes.

In addition to carrying out his planned agenda, Taylor also
helped fight the war against terrorism. As the 9/11 Commission
wrote in its "Monograph on Terrorist Financing," in the months
after the attack, "The U.S. government focused, for the first time,
on terrorist financing and devoted considerable energy and
resources to the problem."

Taylor describes our government's successful effort to freeze
terrorist financing, build a coalition of countries willing to
support the freeze and create an effective monitoring system to
ensure countries were keeping their promises.

He also details Treasury's efforts to win the peace in
Afghanistan and Iraq. By the fall of 2001, the United States had
persuaded donors to provide $4.5 billion to Afghanistan. We then
helped get the country's new government running. In Iraq, Taylor
helped persuade our allies to forgive some 80 percent of the
country's pre-war debt.

Government success, Taylor concludes, flows from clear,
understandable principles. "Principles provide an anchor or a
guide, which is especially useful when you can be thrown off track
by pressures," he says. "The more confidence you have in the
principles, the better."

During his time at Treasury, Taylor certainly had confidence in
his principles. That's how he got so much done. Anyone who wants to
know how government can work when it's well handled should read
Taylor's book -- and follow Taylor's example.